Disclaimer: I'm not a lawyer. This advice may be materially inaccurate.
What does redistribution mean?
Redistribution means you have somehow caused the software to make its way to another person. Things that probably count as distribution:
- Placing the file on a public website.
- Printing the binary in hex onto paper and giving that paper to someone else.
- Putting the file onto a USB drive and handing it to someone.
- Putting the file onto your own computer, then giving that computer to someone else.
- Putting the file onto a shared network drive.
Things that probably don't count as distribution:
- Copying the files onto your own computer(s)
- Compiling the program
- Placing the program on your phone.
- Printing out the source code on paper, but not sharing it.
As a practical matter, I recommend ensuring that BSD license accompanies any instances of the software, even if you don't intend to distribute those instances. If you don't distribute it, then nobody will see it. If you "inadvertently" distribute the software, then including the license means you are in compliance.
Should you include the license in the exe or in the same folder:
The specific clause is:
Redistributions in binary form must reproduce the above copyright
notice, this list of conditions and the following disclaimer in the
documentation and/or other materials provided with the distribution.
Including the license in the exe (e.g., via some sort of credits menu) is typically fine. I'll note that this is the approach used by Chrome (help->about chrome has a link to "other open source software" which includes these licenses). This approach works well for software which makes use of an installer, since users probably won't be looking in the install folder.
Including the license in the folder adjacent to the exe is also typically fine. If your application does not have an install process (e.g., installed via xcopy deployment), then this approach works well, since users will easily be able to find the license.
If your software is sold in a physical box, then printing out the license and including that license inside the box also works.
What if I violate the license by not including the BSD terms?
If you violate the license, you are subject to a lawsuit for copyright violation. What happens next depends on how the copyright owners wishes to proceed:
Some copyright owners will sue. The actual results/penalties for such a violation will depend on a variety of factors.
Some copyright owners will ask you to comply with the license. If you respond by apologizing and then complying, that's as far as it will go.
Some copyright owners will ask you for money (with threat of lawsuit). I would expect this result if the copyright owners offers a dual-licensing scheme (i.e., where you can pay the copyright owner to exclude the acknowledgement).